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THE SOVEREIGN SOCIETY OFFSHORE A-LETTER
Your Link to Freedom, Prosperity & Privacy in the Offshore World
Wednesday, August 14, 2002 - Vol. 4 No. 80
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In This Issue:
* COMMENT: Your Money.
* OFFSHORE: Pension Funds Silent. Worried Foreigners. Hong Kong Too.
IRS & Jersey Agree. Rep. Paul on Bailouts. Shell Game. New Indexes.
* PRIVACY & RIGHTS: Alien Fingerprinting. Rep. Armey Stops TIPs. But It May Sneak By. Informant Plan Shrinks. Cato on Snoops. Financial Privacy Under Attack.
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Our mid-week guest commentator is ERIC ROSEMAN, Sovereign Society Council of Experts member and a leading Canada-based offshore investment advisor.
Bob Bauman, A-Letter Editor
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* COMMENT: Your Money.
Dear A-Letter Reader:
The Bush administration is virtually guaranteeing higher inflation 12 months from now. Commodities and their production companies should stage a substantial rally over the next year. Where to invest now? Look at oil stocks, gold stocks, foreign currencies and hedge funds. Hard assets, long in the basement and extremely cheap compared to financial assets, are poised to log big profits for global investors in 2003. In fact, commodities are already rising this year, led by oil, gold and several of the grains, including corn and wheat. Commodities provide negative correlation to stocks and bonds and should represent approximately 10-15% of a diversified portfolio.
Combined with rising deficits and massive military spending, the US government is going to continue debasing the American dollar, already down 8% this year versus the euro. In its efforts to combat terrorism and eradicate the potential threat of nuclear arms development in Iraq, the US may eventually attack Saddam Hussein. Unfortunately, this will catapult the Middle East into a new level of conflict at a time when mediation is desperately required after two years of brutal hostilitiesbetween Israelis and Palestinians.
The current global macro economic scenario increasingly resembles early stage Vietnam in 1967. Back then, low inflation was coming to an end, the government was spending like mad on military expansionism in South Asia and the dollar was just four years away from breaking its link to gold bullion.
A diversified portfolio today should include oil stocks. Italian oil giant, ENI Spa. (NYSE-E) and France's TotalElf (NYSE-TOT), offer attractive dividend yields and should rise along with the price of oil as conflict increases in the Middle East. Gold stocks offer great upside leverage to the big bullion rally that lies ahead. Newmont Mining (NYSE-NEM) is a first class producer and is the world's largest gold mining concern.
Don't forget foreign currencies. Short term interest rates in the US will be lower by Christmas as the Federal Reserve struggles to expand the weakening economy. Lower rates imply a weaker dollar. Buy the euro and Swiss franc with US dollars. Historically, these units provided big profits amid dollar declines and rising inflation. (The ECU was replaced by the euro in 1999).
For a diversified portfolio of commodities futures and options, the Oppenheimer Real Assets Fund, over weighted in energy futures, provides exposure to an asset class offering negative correlations to common stocks. Offshore, GAM Trading Fund Class IV USD is a multi-manager fund that has exposure to trading advisors specializing in t0rading commodities long and short. The Fund also trades global indexes, interest rates and currencies long/short with negative correlation to the S&P 500 Index.
That's the way that it looks from here.
Eric N. Roseman in Montreal, Canada.
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COMMENT LINKS:
* Eric Roseman's ENR Asset Management, Montreal, Canada.
LINK:http://www.eas.ca/
E-MAIL: eroseman@qc.aibn.com
* Markets are moodier, but some investors spy gold in volatility.
LINK: http://www.economist.com/finance/displayStory.cfm?story_id=1270809
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* OFFSHORE *
NO PENSION ACTION AGAINST OFFSHORE COMPANIES
Officials controlling $1 trillion in pensions funds take no action against US corporations who have moved to tax havens.
LINK:http://www.nytimes.com/2002/08/13/business/13HAVE.html
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FOREIGN CORPORATIONS NOT EXEMPT FROM NEW U.S. LAW Jail, sanctions, fines worldwide, like it or not. LINK:http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory
&c=StoryFT&cid=1028185702224
HONG KONG also fears new US corporate law restrictions.
LINK:http://www.tax-news.com/asp/story/story.asp?storyname=9057
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JERSEY BOWS DEEP TO U.S INTERNAL REVENUE SERVICE
The once ultra-private Channel Island signs a tax information exchange agreement with the US government, as the UK Foreign Office smiles.
LINK:http://www.tax-news.com/asp/story/story.asp?storyname=9053
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REP. RON PAUL SEES U.S. BANKERS HAND IN URUGUAY BAILOUTWASHINGTON: He says US taxpayers are forced to subsidize US banks and business interests with a $1.5 billion loan to a bankrupt nation.
LINK:http://www.house.gov/paul/tst/tst2002/tst081202.htm
* Uruguay repays $1.5b loan plus $271,351 in interest.
LINK:http://europe.cnn.com/2002/WORLD/americas/08/12/uruguay.usa.reut/index.html
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CONGRESS PLAYS SHELL GAME ON 'INVERSIONS'
It's all politics, not truth. Leave them alone, says NCPA.
LINK:http://www.ncpa.org/iss/tax/2002/pd081202b.html
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WORLD ECONOMIC FREEDOM
The Cato Institute and Canada's Fraser Institute report that economic freedom continues to flourish around the world.
LINKS:http://www.upi.com/view.cfm?StoryID=20020808-123211-7655r
http://www.cato.org/new/06-02/06-24-02r-2.html
* World Economic Freedom: 2002 Annual Report.
LINK:http://www.cato.org/economicfreedom
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MOST STABLE NATIONS INDEX
National ratings based on economic, political stability.
LINK:http://www.economist.com/markets/displayStory.cfm?story_id=1273746
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* PRIVACY & RIGHTS *
WELCOME TO THE UNITED STATES
And upon arrival, you may be fingerprinted on the spot.
LINK:http://www.washingtonpost.com/wp-dyn/articles/A10090-2002Aug12.html
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REP. ARMEY RESCUES U.S. FROM BIG BROTHER BUSH WASHINGTON.
US House Republican Leader blocks unconstitutional Ashcroft-Bush neighborhood spy/informant plan.
LINK:http://www.washtimes.com/op-ed/20020729-91234329.htm
BUT TIPs MAY SLIP THROUGH CONGRESS
Nat Hentoff explains why it still may become law.
LINK:http://www.villagevoice.com/issues/0233/hentoff.php
* Under Fire, US Justice Dept. Shrinks TIPs Program.
LINKS:http://www.washingtonpost.com/wp-dyn/articles/A921-2002Aug9.html
http://www.foxnews.com/story/0,2933,60082,00.html
http://www.nandotimes.com/politics/story/495206p-3949172c.html
* "United We Stand, but We'll Snoop Divided,"
LINKS:http://www.cato.org/dailys/07-25-02.html
http://reason.com/links/links080902.shtml
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YOU CAN PROTEST TIPs INFORMERS PLAN
ACLU site targets opposition to the Bush informant scheme.
LINKS:http://www.aclu.org/tips
http://www.wired.com/news/politics/0,1283,54492,00.html
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FINANCIAL PRIVACY UNDER GOVERNMENT ATTACK
All US financial institutions soon will spy for the government.
LINK:http://www.pacificresearch.org/pub/ecp/2002/epolicy08-08.html
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